Amendment 2 on West Virginia election ballots could open the door to lower property taxes for businesses and on people’s vehicles.
Gov. Jim Justice, the highest-profile opponent of the amendment, wants to hit the brakes. “The whole idea of hooking the car tax to it is nothing more than the purchase of your vote,” Justice said during a briefing this week, reiterating the kind of assessment he has made repeatedly in recent weeks.
“It is a way to get you to vote for this and then Charleston’s got control of your destiny and future, and that would be a big mistake.”
Justice has been barnstorming the state almost every day to bang the drum against the amendment. He is being countered by some of his fellow Republicans, particularly senators Craig Blair and Eric Tarr, who contend tax reform under the amendment would lead to economic growth.
And organizations across the state are lining up with positions on the amendment too.
The West Virginia Chamber of Commerce and the West Virginia Manufacturers Association for years have favored the kind of changes it could bring. On the other side, the West Virginia Association of Counties and the County Commissioners Association of West Virginia have taken positions against it, expressing concern about uncertainty for the finances of local governments that depend on property taxes.
This is one of four constitutional amendments that West Virginia voters are being asked to consider. Early voting starts Oct. 26, and Election Day is Nov. 8.
Amendment One: Can the courts intervene in West Virginia impeachments?
What does Amendment Two do?
Amendment Two recognizes that, for decades, property taxes have been defined by the state Constitution. This amendment would allow the Legislature more flexibility to make changes to property taxes.
This is what it says: “To amend the State Constitution by providing the Legislature with authority to exempt tangible machinery and equipment personal property directly used in business activity and tangible inventory personal property directly used in business activity and personal property tax on motor vehicles from ad valorem property taxation by general law.”
State lawmakers have long talked about having more flexibility with property taxes, particularly those that businesses pay on equipment and inventory. Last year, lawmakers passed a resolution that could allow changes on personal property tax rates.
Now citizens will have a say in whether that’s wise.
Property taxes are a main piece of how counties pay for services like school systems, ambulance services, libraries and more.
So there’s a likely trade-off that voters will have to weigh.
What’s the argument for adopting the amendment?
For one, there’s the annual property tax on vehicles that the governor mentioned. Households may judge that this is their opportunity to eliminate that tax.
“Here’s what’s for certain: If we vote down Amendment Two, there is no chance that you’re ever going to have the personal property tax on your automobile, that 13th car payment, eliminated. It will not happen,” Senate President Craig Blair, R-Berkley, said this week on MetroNews’ “Talkline.”
The other is the potential elimination of property taxes that businesses pay on machinery and inventory. Supporters of the amendment say those taxes make West Virginia an outlier among competing states. And they contend tax relief would give companies, including small ones, more leeway to turn profit and reinvest in capital and employees.
“Over 70 percent of the employment opportunities in the state of West Virginia are small business owners, and they pay that personal property tax too,” Blair said. “And they’re the ones that actually grow jobs.”
.@WVSenatePres and @EricJTarr4WV issued a call today for Governor Justice and State Revenue Secretary Dave Hardy to participate in a series of public forums to allow West Virginian's complete and accurate information about Amendment Two. Senator Blair joins @HoppyKercheval. pic.twitter.com/3Yr96oUphW
— MetroNews (@WVMetroNews) September 27, 2022
“We think that when people understand it, they tend to be very supportive of it,” Steve Roberts, the executive director of the West Virginia Chamber of Commerce, said this week on”Talkline.”
Roberts said businesses and potential employers already seek property tax breaks when they invest in West Virginia, often through individual deals called payment in lieu of taxes. That’s essentially a lease arrangement with the state on the books as the owner of machinery, so it’s not taxed. The companies then use the equipment tax-free.
But Roberts differentiated “those that are already here and are not getting those breaks.” This amendment would place those companies on equal footing, he said.
“There is a fairness issue. There’s really an equity issue here,” Roberts said. “And many of the small businesses that we represent don’t get to take advantage of this.”
What is @WVaChamber perspective on Amendment Two? Steve Roberts, West Virginia Chamber of Commerce President, discusses the chamber's position to @HoppyKercheval. WATCH: https://t.co/yCFQ3nDJuy pic.twitter.com/nOCQXPhvcM
— MetroNews (@WVMetroNews) September 27, 2022
What’s the argument against it?
The West Virginia Association of Counties and the County Commissioners Association of West Virginia are concerned about loss of authority over about $550 million in “dedicated, constitutionally-protected revenues” — and “handing that money to the Legislature.” They also expressed concern over lack of consensus among the Senate, House and governor about a solid plan to make up revenue to the local governments.
“They’re very strong, in their vote, that they want to keep those revenues local,” Matt Harvey, who recently became president of the Association of Counties, told Panhandle Live on WEPM Radio. “They don’t want the revenues going to Charleston and having each county fight to claw it back — and that’s the fear.”
Blair and other Senate leaders have pointed toward an adaptable plan with detailed information about all 55 of West Virginia’s counties. They have suggested money from the state would more than make up for what counties give up in property taxes. That could pay for expenses that local governments now struggle to meet, including jail bills, the Senate president has said.
But opponents of the amendment have said that’s still too much uncertainty over whether the House of Delegates would approve that plan too, whether future legislators would keep their word and whether all bets might be off during the strain of an economic downturn.
“It’s bad for not only our schools, but our first responders, our sheriffs, our deputies, our fire departments across the state, our libraries,” said Dale Lee, president of the West Virginia Education Association.
Lee had this conclusion: “I hate to pay the car tax too, but one of the things they’re not telling people is counties will have to make up the revenue somewhere,” suggesting that county assessors will wind up feeling pressure to increase valuations on real property. “At some point, the counties have to have some money, and that’s one of the ways to do it.”
What is @WVEADaleLee's opposition to Amendment Two? Dale provides his explanation to @HoppyKercheval. WATCH: https://t.co/yCFQ3nDJuy pic.twitter.com/nCoUu0ZbpR
— MetroNews (@WVMetroNews) September 27, 2022
What would the Constitution say?
With the adoption of Amendment Two, the Constitution would say this:
ARTICLE X.
- 1. Taxation and finance.
Subject to the exceptions in this section contained, taxation shall be equal and uniform throughout the state, and all property, both real and personal, shall be taxed in proportion to its value to be ascertained as directed by law. No one species of property from which a tax may be collected shall be taxed higher than any other species of property of equal value; except that the aggregate of taxes assessed in any one year upon personal property employed exclusively in agriculture, including horticulture and grazing, products of agriculture as above defined, including livestock, while owned by the producer, and money, notes, bonds, bills and accounts receivable, stocks and other similar intangible personal property shall not exceed fifty cents on each one hundred dollars of value thereon and upon all property owned, used and occupied by the owner thereof exclusively for residential purposes and upon farms occupied and cultivated by their owners or bona fide tenants, one dollar; and upon all other property situated outside of municipalities, one dollar and fifty cents; and upon all other property situated within municipalities, two dollars; and the Legislature shall further provide by general law for increasing the maximum rates, authorized to be fixed, by the different levying bodies upon all classes of property, by submitting the question to the voters of the taxing units affected, but no increase shall be effective unless at least sixty percent of the qualified voters shall favor such increase, and such increase shall not continue for a longer period than three years at any one time, and shall never exceed by more than fifty percent the maximum rate herein provided and prescribed by law; and the revenue derived from this source shall be apportioned by the Legislature among the levying units of the state in proportion to the levy laid in said units upon real and other personal property; but property used for educational, literary, scientific, religious or charitable purposes, all cemeteries, public property, tangible machinery and equipment personal property directly used in business activity, tangible inventory personal property directly used in business activity, personal property tax on motor vehicles, the personal property, including livestock, employed exclusively in agriculture as above defined and the products of agriculture as so defined while owned by the producers may by law be exempted from taxation; household goods to the value of two hundred dollars shall be exempted from taxation. The Legislature shall have authority to tax privileges, franchises, and incomes of persons and corporations and to classify and graduate the tax on all incomes according to the amount thereof and to exempt from taxation incomes below a minimum to be fixed from time to time, and such revenues as may be derived from such tax may be appropriated as the Legislature may provide. After the year nineteen hundred thirty-three, the rate of the state tax upon property shall not exceed one cent upon the hundred dollars valuation, except to pay the principal and interest of bonded indebtedness of the state now existing.